Cash for clunkers: are we being ripped off?
Compared to Europe and the USA, Aussies will get less cashThe Cash for Clunkers scheme proposed by Prime Minister Julia Gillard over the weekend may not be as generous as it first seemed.
The $2000 rebate towards a new more fuel-efficient car -- in return for leaving a barely road-worthy pre-1995 wreck behind -- is not that impressive by global standards.
Indeed, four of the five countries that pioneered the Cash for Clunkers rebate -- North America, Germany, the United Kingdom and Italy -- paid out close to or more than double what the Australian Government is offering Australian motorists.
In North America last year car buyers could pocket up to $USD4500 ($AUD5000) for trading-in a gas guzzler less than 25 years old.
The $1 billion program was so successful that the funds intended to last for five months actually ran out in the first six days -- and so Congress approved a further $2 billion to see the program through. In the end, 690,000 old cars got taken off US roads and sent to the crusher, costing the tax payer $2.7 billion.
In Germany, where the scheme sparked a massive 40 per cent spike in new-car sales, customers received up to EU2500 each ($AUD3600) for trading-in a car that was more than nine years old.
In the UK, motorists received up to GBP2000 ($AUD3500) for trading-in cars that were more than nine years old.
In Italy, motorists could received up to EU3500 ($AUD5000) if they bought a super efficient new car and traded-in a gas-guzzler.
However, the difference is that the incentives in North America, Germany, the United Kingdom and Italy were being offered as a measure to stimulate new-car sales -- and each country's economy -- during the peak of Global Financial Crisis.
The Australian scheme, meanwhile, is designed to encourage buyers into newer, more efficient cars ahead of proposed new vehicle emissions targets from 2015.
A statement from Prime Minister Gillard's office says: "The [Cash for Clunkers] scheme is designed for the transition period ahead of the introduction of new mandatory carbon dioxide emission standards for all new cars from 2015.
"Similar [rebates for old cars] have been introduced in other countries... but the Cleaner Car Rebate has a greater emphasis on introducing lower-emission vehicles into the Australian car fleet over the medium term."
| Comparison of scrappage programs for selected countries | ||||
| Country | Maximum incentive | Age requirement | Emissions requirement | Cost to government |
| USA | $4500 | Under 25 years old | No | $3 billion |
| Germany | €2500 | Over 9 years old | No | $7.1 billion |
| UK | £2000 | Over 10 years old | No | $500 million |
| France | €1000 | Over 10 years old | Yes | $554 million |
| Italy | €3500 | Over 10 years old | Yes | NA |
Further 'Cash for clunkers' reading:
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